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A checking account can be a convenient place to store your cash and manage daily transactions. Among its benefits: You can usually make as many transfers in and out of the account as you like. Also, your funds are likely to be insured.
There are, however, some cons, too. You probably won’t earn much or any interest for parking your money in a checking account, and you may be hit with an array of fees that nibble away at your funds.

Here, take a closer look at checking account pros and cons so you can pick the right financial product to suit your needs.

What Is a Checking Account?

Simply put, a checking account is a safe place to stash funds and enable the flow of money in (what you earn and receive) and out (what you spend).

Whether held at a brick-and-mortar bank, an online bank, or a credit union, a checking account is often the hub of a person’s financial life. Your pay can be seamlessly direct-deposited, if you like.

For your everyday spending, you might schedule automatic payments for your mortgage and utilities, write a check when paying for a doctor’s appointment, and tap your debit card when treating yourself to a wine tasting with friends on the weekend.

Benefits of Checking Accounts

Here’s a closer look at the pros and cons of a checking account, starting with the upsides.

Security

Yes, you could stuff your money under the proverbial mattress, but with a checking account, you have a secure spot for it, where it can’t get lost, stolen, or damaged.

If your bank is insured by the FDIC (Federal Deposit Insurance Corporation) or, in the case of a credit union, the NCUA (National Credit Union Administration), your account will typically be covered up to $250,000 per depositor, per insured institution, for each account ownership category.

Easy Access to Cash

Checking accounts allow you to access your money quickly and easily, whether you need to pay for a meal or something unexpected, like a school donation. Setting up direct deposit allows your paychecks to be transferred directly into your checking or savings account, with some banks offering access to cash up to two days early.

You can then tap your funds by using your checking account’s debit card, writing checks, snagging some cash from the ATM, or making a transfer.

Pay Bills Conveniently

Here’s another benefit of a checking account: Having a checking account means you can get your bills taken care of without much effort. You might set up recurring payments to a car loan, for instance, or use a digital payment app to send money to your roommate, a friend, or your yoga teacher. You can also typically move funds quickly via wire transfer, which can be especially useful for international transactions, and other methods as well.

Debit Card for Purchases

When you open a checking account, you’re usually provided with a debit card that’s linked to the account. Similar to a credit card, you can typically use your debit card to pay in person or online for anything from this week’s groceries to a cool new pair of shades to a matcha latte.

Unlike a credit card, however, debit cards pull funds directly from your checking account. They usually only let you dip into funds you actually have on deposit, which can help you keep spending in check and stay on budget, not to mention avoid credit card debt.

Rewards

Some checking accounts come with rewards that can be a nice perk. For example, when you open an account, you might get a sign-up bonus. Who doesn’t like free money? Or your debit card may carry rewards, similar to those of a credit card, such as cash back.

Direct Deposit Benefits

Direct deposit can be a seamless way to get paid; in fact, more than 95% of Americans get paid this way, according to National Payroll Week. Direct deposit sends cash, ready to spend, straight into your bank account, so you don’t have to deal with depositing a check or cash.

FDIC Insurance Protection

As noted above, most financial institutions (but not all) are insured by either the FDIC or NCUA. In the very rare event of a bank failure, you would be protected from loss up to those limits of $250,000 per depositor, per account ownership category, per insured institution. Note: Some institutions offer programs that provide even more than $250,000 in insurance.

Cons of Checking Accounts

As you might guess, there are advantages and disadvantages to checking accounts, as is the case with most financial products. Checking accounts are designed to serve customers’ everyday, short-term money needs and can have a few potential downsides to consider.

Low or No Interest Earned

While your money is sitting in your checking account, it is probably earning very low, if any, interest. For instance, as of June 2025, the average interest checking account rate was a meager 0.07% of one percent, according to the FDIC. Translated into dollars and cents, that means that if you kept $5,000 in your checking account for a year, you would only earn $3.50 in simple interest.

That said, there are high-yield and premium checking accounts available that pay heftier interest rates. These may come with minimum deposit and balance requirements. Online-only banks frequently offer these accounts without those barriers, however, and with interest rates that are several times higher than the national average.

Potential Overdraft and Other Fees

Sooner or later, many people will try to transfer more money out of their checking account than they actually have on deposit. It could be a simple math error, or they might have forgotten about that on-the-fly payment they made to contribute to, say, a friend’s baby shower gift.

Not having enough money in your checking account can lead to overdraft fees. The average charge currently stands at a steep $25 to $35, with an average (as of 2024) of $27.08. Also, even if you have overdraft protection — meaning you have linked accounts so that money can be pulled from savings into checking to cover payments, if needed — you may still be charged a fee. However, it’s likely to be lower than an overdraft charge.

Also, check the fine print when signing up for a new checking account: There can be other fees, such as account maintenance and out-of-network ATM fees (more on those below).

Security Risks

While banks are extremely safe overall, there is always a small possibility of a security risk (such as a hack). Losing or having your debit card stolen and used without your authorization is another concern— and it can be a common one. A card thief could potentially gain access to the funds in your checking account.

It’s vital to report the issue within two days of noticing the card is missing so that you’ll be liable for no more than $50 in unauthorized usage. Otherwise, you could be liable up to $500 or more depending on the circumstances.

Minimum Balance Requirements

Some checking accounts require the account holder to maintain a certain balance to avoid monthly account fees. Or they might want account holders to keep a certain sum on deposit in order to earn a premium interest rate. Depending on the institution, this minimum deposit could be several hundred or more than a thousand dollars. If your balance dips below this amount, you could be hit with fees and/or lose your interest rate.

Recommended: Ways to Manage Your Money

When a Checking Account Makes Sense

Quite simply, checking accounts make sense for the vast majority of Americans. It typically serves as the hub of one’s daily financial life.

Some people, though, are unbanked, meaning they have not (or are not able) to access the usual banking services. If you are seeking a checking account and haven’t been able to secure one, you can try a few other options:

•   It might be easier to get an account at a credit union, if you qualify for one based on where you live, your profession, or other factors.

•   Your banking history may reveal some issues, such as multiple overdrafts, as tracked by ChexSystems (a kind of reporting agency for the banking industry). In this situation, you might qualify for a second-chance account. This kind of account may have higher fees and/or minimum balance requirements, but it can be a good way to show that you can handle an account responsibly. In some cases, a second-chance account can be a stepping stone to a standard checking account.

When Other Accounts May Be Better

There are some situations in which another kind of account could be better than a checking account. A few scenarios to consider:

•   If you are hoping to park your money for a while and earn interest vs. spend it, a savings account can be a good bet. Some savings accounts have limits on how many transactions can occur per month (check the fine print). Whether or not that applies, you will likely earn a higher interest rate than you would with a checking account. For instance, the current average interest rate for a savings account is 0.38% vs. 0.07% for checking.

•   For those who want their money to earn still more money, a high-yield savings account can offer still more earning potential. At the time of publication, some online-only banks were offering rates in the range of 4.5%.

•   A CD (or certificate of deposit) can be another way to earn a higher return on money you keep in a bank. However, these don’t offer the accessibility of a checking account. You agree to keep your funds on deposit in return for the bank guaranteeing a certain interest rate and are usually penalized if you withdraw funds before the end of your time.

•   For those who want spending power without a checking account, prepaid debit cards can deliver. You load funds onto them and can then spend or pay bills with them. They are typically backed by a major network, like Visa or Mastercard.

•   One other option is to use digital payment services, such as Venmo and PayPal. These can allow you to move funds to shop and otherwise spend without a bank account.

Checking Account Features To Consider

If you are looking for a checking account, you may want to focus on these three considerations:

ATM Access and Fees

Since accessibility is a key selling point of checking accounts, you likely want your money to be within easy and affordable reach. Check out a financial institution’s network of ATMs and make sure they are near your usual haunts.

Also see what the charges are for using an out-of-network bank: Certain banks (especially online-only ones) may waive those usual out-of-network fees that can ding you; these currently average $4.77 a pop.

Online/Mobile Banking

Today, it’s par for the course for financial institutions to provide online banking features and mobile banking apps, but some provide more robust, user-friendly digital services and offer them for free.

As you consider your options, you might look for a bank that helps you save automatically. A round-up function that nudges purchases up to the next whole dollar amount and adds the extra money to your savings can be valuable.

Also helpful are dashboards that allow you to see your money (earnings, spending, and savings) and credit score at a glance, for no extra charge. This feature can help you budget better.

Overdraft Protection

As mentioned above, many people have those “oops” moments and overdraw their accounts. Some banks will give you free overdraft protection up to a certain sum. For instance, they might cover up to $50 of your overdraft without charging you the standard fees. This can be a valuable feature when you are deciding which financial partner is right for you.

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Get access to higher APY, credit card cash back rewards, discounts, and more.

Account Maintenance Fees

As noted above, some banks will charge monthly account maintenance fees for holding a checking account at their institution. It can be one of the ways that banks make money. These fees can range from, say, $5 to $12 a month or more, which can take a bite out of your budget.

You may find that some banks, especially online ones, offer no-fee checking accounts. Or a financial institution may waive fees if you keep a certain amount on deposit across your accounts or if you meet other requirements.

Customer Service and Support

Another factor to consider is the kind and quality of customer service and support a financial institution offers. Some people may gravitate toward online banks which typically have 24/7 online support by phone or text chat. Others may prefer banking with a traditional bank where they can meet in-person with team members. Consider what’s important to you to make the best decision for your news.

The Takeaway

For many people, a checking account can be a reliable hub for their personal finance needs. You can store your earnings securely and still easily access your money to pay bills and fund daily purchases.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Are checking accounts free?

Some are. You can often find free checking accounts from traditional and online-only banks as well as credit unions. While these accounts may be billed as “free,” keep in mind that some fees may apply, say, if you overdraft your account.

What happens if my checking is overdrawn?

If your checking account is overdrawn, that means you have tried to withdraw more money than you have in your account. This can lead to payments not being processed (a check bouncing, for example) and charges piling up. By linking a checking and savings account, you may be able to have funds automatically transferred from savings into checking to cover the shortfall. Your bank may charge you a fee, whether they cover the shortfall through overdraft protection or not.

Can I have multiple checking accounts?

There is usually no limit on how many checking accounts you can have. It can be convenient to have one for, say, your salary and your living expenses and another for a side hustle and related expenses.

Are checking accounts FDIC insured?

Most but not all checking accounts are FDIC-insured. You can look for this feature before opening an account. With FDIC insurance, you are covered for up to $250,000 per depositor, per account ownership category, per insured institution in the very rare event of a bank failure. Some banks have programs that offer even higher amounts of insurance.

Do checking accounts offer fraud protection?

Most banks will refund you if your account is hacked or your debit card is used without permission, provided you report it in a timely fashion. Check with your financial institution about their policies, but note that if you willingly sent money to an individual or business that turned out to be a scam, refunds are less likely.

Photo credit: iStock/SDI Productions

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.


¹SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBNK-Q225-103

If you already have a semester or two of college under your belt, you might be asking yourself, “How much do I owe in student loans?” It’s hard to keep track of your student loan balance, especially if you haven’t started repayment yet.

The amount might startle you. According to the Education Data Initiative, the average student loan balance, including federal and private student loans, is $41,618. The sooner you find out your student loan amounts, the sooner you can make a plan to pay them off.

The sooner you find out your student loan amounts, the sooner you could make a plan to pay them off. Here’s how to check your student loan balance.

How to Find Out How Much You Owe in Federal Student Loans

Federal student loans typically come in two types: unsubsidized loans and subsidized loans. If you’re a graduate student, you might also have a Graduate PLUS federal student loan. So then, how to check a student loan balance? Fortunately, information on all your federal student loans can be found in one spot. You can look up your balance on the Federal Student Aid (FSA) website.

To check your student loan balance, simply log into your account at StudentAid.gov with your FSA ID and password. There, you’ll find your current student loan balance, the interest that has accrued on your account, payment status, and your loan servicer. If your loan servicer has changed, that information will be there as well.

How to Find Out How Much You Owe in Private Student Loans

There’s no one central website to check your balance for private student loans. One method to figure out how much you owe in private loans would be to contact each loan servicer individually.

If your loans have new servicers and you’re having trouble tracking them down, call your original lenders and ask who the new servicers are. Your school’s financial aid office should also have this information.

Another way to find your loan servicers is to check your credit report. You can get a free copy of your credit report from the three main credit bureaus (Equifax, Experian, and TransUnion) and also from AnnualCreditReport.com.

Your report will list your student loans, the loan servicers, and how much you borrowed. From there you can call each server to find out how much you currently owe. Keep in mind, private student loan providers set their own terms, including loan term length, interest rates, and repayment plans.

It might be a good idea to organize your private student loans and determine when the repayment phase kicks in for each, as it could be different from the federal student loan repayment plan.

Keeping Student Loan Debt Manageable

If this is your first time looking up how much you owe in student loans, you might be feeling major sticker shock. Take a deep breath. Keeping track of student loans can be a big undertaking, so don’t panic.

One way to help manage your student loan debt while you’re in college is to get a part-time job. You could look for opportunities to become a paid tutor, intern, or residence assistant. If working part-time during school isn’t possible, you could plan on getting a full-time job in the summer and live off the savings throughout the school year.

In addition to picking up paying jobs, you could also explore scholarships. These help pay for your education and you don’t have to pay them back. All it takes is some dedicated time looking for the right match. You could check with your university and any organizations you’re involved with to see if you can help fund your tuition this way.

Paying Off Your Student Loans

Once you’ve learned how to check your student loan balance and then determine how much you owe, it’s time to develop a master plan to pay your loans off. This is important, especially since the average monthly student loan payment is $536, according to EducationData.org, which is no small change.

These are some of the ways you could pay off what you owe.

Using a Government Repayment Plan

If you have federal student loans, you’ll likely repay your loans using a government repayment plan. This includes income-driven repayment plans where the minimum payment is based upon factors like your discretionary income and family size, and the repayment term can be stretched out to 25 years in some cases.

One downside of these options is that they typically increase the total amount you pay back when compared to the standard 10-year repayment plan.

You could also look into Public Service Loan Forgiveness (PSLF), as long as you meet the requirements. To qualify, you must work for a government agency or certain types of nonprofit organizations.

Making an Extra Payment Each Month

If you want to pay off your student loans more quickly, there are a few ways to go about it. First, you could make extra payments. You want to make sure the bulk of your extra payment goes toward your principal, not the interest, so it might make sense to contact your servicers or lenders to let them know if you want to do that.

It will be helpful to see all of your expenses and income together to determine how much extra cash you can put toward your loans. Drawing up a budget can help you determine how much extra money you can put toward your student loan balance.

DIY Student Loan Debt Payoff Ideas

You could organize your student loan debt by either the highest interest rate or by the lowest total outstanding balance. These methods are commonly referred to as the debt avalanche and debt snowball, respectively.

Paying off the debt with the highest interest rate could help save you money in the long run, whereas paying off the smallest loan balance could give you a quick win.

Once you select a method, you might want to make sure you’re actually making a dent in the balance. One way to do that is to regularly check your balances and see what kind of progress you’ve made. If that method isn’t decreasing your student loan debt as quickly as you’d like, you could switch to a different one.

Refinancing Your Student Loans

Alternatively, you may want to work on ways to reduce your student loan payments. In that case, you could explore student loan refinancing.

When you refinance with a private lender, you replace your old loans with a new private loan, ideally one with a lower interest rate and better terms. Using a student loan refinance calculator can help you figure out how much you might save by doing this.

Once you know the potential savings involved, consider this critical question: Should you refinance your student loans? If it could save you money, refinancing might be worth pursuing. However, it’s important to know that if you refinance federal student loans, they will no longer be eligible for federal deferment or forbearance, loan forgiveness programs, or income-driven repayment. If you’re certain you won’t need access to these programs, refinancing may make sense.

Still not sure? This student loan refinancing guide is full of useful information that could help you decide whether refinancing is the right choice.

SoFi Student Loan Refinancing

If you decide to move ahead, student loan refinancing with SoFi could help lower your monthly payments, shorten your student loan term, or save you money on interest. You can choose flexible terms, and there are no origination or prepayment fees. Plus, you can prequalify and get your rate in minutes.

FAQ

How do I find out how much I owe in student loans?

To find out how much you owe in federal student loan debt, log into your account at StudentAid.gov. There, you’ll find your loan amount, the amount of interest that has accrued, and your loan servicer information, among other things. You can contact your loan servicer directly if you have additional questions about your loans.

Do student loans go away after seven years?

No, student loans don’t go away after seven years. There is no student loan forgiveness or cancellation program that is seven years. However, if you default on your federal student loans after 270 days of missed payments, the default goes on your credit report where it remains for approximately seven years. But even once the default status is removed from your credit report, it is still your responsibility to repay your loans in full.

Is $40,000 in student loans a lot?

While $40,000 is a lot of money, in terms of student loan debt, it’s about average. According to the Education Data Initiative, the average student loan borrower owes $41,618 in federal and private student loans.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.